1. Field of the Invention
The present invention relates to gift cards. More specifically, the present invention relates to a gift card for a merchant that may be changed to a different merchant if desired by the recipient.
2. Background of the Invention
Often when a person feels the need to buy another a gift, the person does not know what kind of gifts the other wants or needs, or what others are giving. Gift cards allow a purchaser to give a gift recipient the option of what to buy. This allows for a more personal gift than giving, for instance, cash, but does not force the consumer to buy a specific gift.
There are generally two types of gift cards being marketed. One is referred to as an open loop and the other is referred to as a closed loop. A closed loop is the traditional kind of card. A consumer might go to a convenience store to buy a fixed denomination card for, for instance, BASS PRO SHOPS. The consumer goes into the store, picks up a $100 BASS PRO card, and goes to the register. The register will scan the information about that card into their systems and pass it through their terrestrial networks to a payment processor, which then essentially activates or issues that payment product. From that moment on, the card that the consumer has purchased is activated and is linked to the face value that was printed on the card. The gift card can be redeemed only at that particular merchant, which is, in this instance, BASS PRO SHOPS. The closed loop card has the majority of the gift card market that is out there today, with people buying merchant specific cards and sending them to someone else as a gift. The downside of a closed loop card is that the receiver might not be interested in anything from the chosen merchant. For instance, if a grandmother buys her grandson a BASS PRO gift card and sends it to him, but the grandson does not shop at BASS PRO and there is nothing there that interests him, then the grandson gets no value out of the gift card because he is probably not going to go shop there just to spend the money. His grandmother has wasted her money because she spent that money trying to get her grandson something that he wanted but he did not get such a gift. At the same time, the merchant, who is in business with that payment processor, is holding those funds and generating interest income. Often there are schemes that, over a period of time of card inactivity, the merchant will start charging a monthly maintenance fee that ultimately can result in all of those funds being forfeited back to that merchant. While some states have legislation affecting this, it is still a problem.
The other concept is an open loop card. For this type of gift card, a consumer buys, for instance, a $100 VISA card. That gift card can be sent just like any other gift card and the recipient can use it at any merchant that accepts VISA payments. However, this type of gift card is fairly impersonal as it is very similar to giving cash. Furthermore, consumers who wish to somewhat limit the options of the recipient cannot really do so with this type of card. For instance, a parent may wish to give a gift card to their child who is a college student. However, the parent may not want their child to just buy beer with the gift card. An open loop card, such as a VISA gift card, can be used anywhere VISA cards are accepted and thus could be used for goods the parent does not want their child buying.
Traditional gift cards are generally referred to as not reloadable cards. Since they are not typically a reloadable account, a credit account, or a demand deposit account, they are exempt from the KYC or the Know Your Customer federal regulations. In many cases, a non-reloadable card can be upgraded to a reloadable account at any point in time, but the recipient or the owner of that card has to provide additional information to identify themselves. Information such as a social security number and address may be necessary. This is the same type of information that one would have to submit to open a bank account or apply for credit.
What is needed is a gift card that allows for more freedom to choose a merchant, but while not losing all personalization.